The following correction was printed in the Guardian's Corrections and clarifications column, Tuesday 9 June 2009

In the article below the Strategic Advisory Board for Intellectual Property supplied incorrect information. What the story should have said was that if 1.3 million users sharing files at midday on a particular peer-to-peer website each downloaded just one file a day, this would mean free consumption of 473m items a year, not 4.73bn items.

At least 7 million people in Britain use illegal downloads, costing the economy billions of pounds and thousands of jobs, according to a report.

Shared content on one network was worth about £12bn a year according to the research commissioned by the Strategic Advisory Board for Intellectual Property.

The peer-to-peer network had 1.3 million users sharing files at midday on a weekday. If each of them downloaded only one file a day this would amount to 4.73bn items being consumed free each year.

The ability to download or share content is getting easier with faster technologies and greater storage space.

The new 50 megabytes-per-second broadband access can deliver 200 MP3 music files in five minutes, a DVD of Star Wars in three minutes and the complete digitalised works of Charles Dickens in less than 10 minutes.

David Lammy, minister for intellectual property, said: "Illegal downloading robs our economy of millions of pounds every year and seriously damages business and innovation throughout the UK.

"It is something that needs tackling, and we are serious about doing so."

Ministers privately accept the difficulty attached to criminalising millions of people who now apparently see little wrong with stealing online content.

The International Federation of the Phonographic Industry estimates that there were 890m illegal free music downloads through file-sharing in the UK in 2007 compared with 140m paid downloads. This puts unauthorised access at a ratio of six to one, before offline sharing like disk burning is even considered.

The SABIP report found music downloading had "become part and parcel of the social fabric of our society despite its illegal status". Creative industries provide about 8% of British GDP. Digital copying of their products resulted in the estimated loss of 4,000 jobs in 2004.

Lammy said: "The report helps put the scale of the problem into context and highlights the gaps in the evidence which need to be filled.

"It is important that we understand how online consumer behaviour impacts on the UK economy and the future sustainability of our copyright industries."

SABIP warned that it may be difficult to change attitudes to free downloading as there was "huge confusion" about what is and is not legal.

It claimed that 70% of those aged 15 to 24 did not feel guilty about downloading music for free from the internet and 61% of the age group did not feel they should have to pay for the music they listen to, according to a survey.

Lammy said: "We can't expect 12-year-olds to become copyright lawyers before they can switch on a computer, but we can educate people on enforcement and work towards getting the right people caught and punished, wherever they live."

The UK film industry told the authors of the report that there were just under 100m illegal DVD downloads in 2007 and the global film industry is thought to lose more than £4bn a year.